Holly Energy Partners & HollyFrontier Corp. Announce Dropdown of Woods Cross Refinery Units for Approximately $275.0 Million;...
September 19 2016 - 6:45AM
Business Wire
HollyFrontier Corporation (NYSE: HFC) ("HollyFrontier") and
Holly Energy Partners, L.P. (NYSE: HEP) ("Holly Energy") today
announced an agreement in principle for the acquisition by Holly
Energy of a HollyFrontier subsidiary, which owns certain Woods
Cross Refinery units constructed as part of the Woods Cross
expansion for a total cash consideration of approximately $275.0
million, subject to the execution of definitive agreements and
other customary closing conditions. The total transaction
consideration represents an implied multiple of 8.5 times the 2017
expected EBITDA contribution. Holly Energy expects that the
transaction will be immediately accretive to unitholders and
contribute towards the achievement of HEP’s 8% distribution growth
target. The transaction is expected to close on or about October 1,
2016.
The assets to be acquired by Holly Energy include the newly
constructed crude, fluid catalytic cracking and polymerization
units at HollyFrontier's Woods Cross refinery. In connection with
the closing of the proposed transaction, HollyFrontier and Holly
Energy expect to enter into 15-year tolling agreements for each
respective unit containing minimum quarterly throughput commitments
from HollyFrontier.
In conjunction with the closing of the proposed transaction,
Holly Energy has agreed to a private placement with certain clients
of Tortoise Capital Advisors, L.L.C. for approximately $100 million
of common equity. Holly Energy Partners does not anticipate any
further equity financing needs for the remainder of 2016. The
balance of the purchase price will be financed by borrowings under
Holly Energy Partner’s existing revolving credit agreement.
About HollyFrontier Corporation:
HollyFrontier Corporation, headquartered in Dallas, Texas, is an
independent petroleum refiner and marketer that produces high value
light products such as gasoline, diesel fuel, jet fuel and other
specialty products. HollyFrontier operates through its subsidiaries
a 135,000 barrels per stream day ("bpsd") refinery located in El
Dorado, Kansas, a 125,000 bpsd refinery in Tulsa, Oklahoma, a
100,000 bpsd refinery located in Artesia, New Mexico, a 52,000 bpsd
refinery located in Cheyenne, Wyoming and a 45,000 bpsd refinery in
Woods Cross, Utah. HollyFrontier markets its refined products
principally in the Southwest U.S., the Rocky Mountains extending
into the Pacific Northwest and in other neighboring Plains states.
HollyFrontier and certain of its subsidiaries also currently own a
39% interest (including a 2% general partner interest) in Holly
Energy Partners, L.P.
About Holly Energy Partners, L.P.:
Holly Energy Partners, L.P., headquartered in Dallas, Texas,
provides petroleum product and crude oil transportation,
terminalling, storage and throughput services to the petroleum
industry, including HollyFrontier Corporation subsidiaries. The
Partnership, through its subsidiaries and joint ventures, owns
and/or operates petroleum product and crude gathering pipelines,
tankage and terminals in Texas, New Mexico, Arizona, Washington,
Idaho, Oklahoma, Utah, Nevada, Wyoming and Kansas as well as
refinery processing units in Kansas and Utah.
HFC & HEP Forward Looking Statement:
The statements contained herein relating to matters that are not
historical facts are "forward-looking statements" within the
meaning of the federal securities laws. These statements are based
on HollyFrontier’s and Holly Energy’s beliefs and assumptions,
including those of Holly Energy’s general partner, using currently
available information and expectations as of the date hereof, are
not guarantees of future performance and involve certain risks and
uncertainties. Although HollyFrontier, Holly Energy and Holly
Energy’s general partner believe that such expectations reflected
in such forward-looking statements are reasonable, neither
HollyFrontier, Holly Energy nor Holly Energy’s general partner can
give assurance that such expectations will prove to be correct.
Therefore, actual outcomes and results could materially differ from
what is expressed, implied or forecast in these statements. Any
differences could be caused by a number of factors including, but
not limited to:
- risks and uncertainties with respect to
the actual quantities of petroleum products and crude oil shipped
on Holly Energy's pipelines and/or terminalled in Holly Energy's
terminals;
- the economic viability of HollyFrontier
Corporation, Alon USA, Inc. and Holly Energy's other
customers;
- the demand for refined petroleum
products in markets HollyFrontier and Holly Energy serve;
- HollyFrontier's and Holly Energy's
ability to successfully purchase and integrate additional
operations in the future;
- HollyFrontier's and Holly Energy's
ability to complete previously announced or contemplated
acquisitions;
- the availability and cost of additional
debt and equity financing;
- the possibility of reductions in
production or shutdowns at HollyFrontier refineries, including
refineries utilizing Holly Energy's pipeline and terminal
facilities;
- the effects of current and future
government regulations and policies;
- HollyFrontier's and Holly Energy's
operational efficiency in carrying out routine operations and
capital construction projects;
- the possibility of terrorist attacks
and the consequences of any such attacks;
- general economic conditions; and
- other financial, operations and legal
risks and uncertainties detailed from time to time in
HollyFrontier's and Holly Energy's Securities and Exchange
Commission filings.
The forward-looking statements speak only as of the date made
and, other than as required by law, we undertake no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
Use of Non-GAAP Financial Information
This news release includes the term forecasted EBITDA. This is a
non-GAAP financial measure. Forecasted EBITDA is based on Holly
Energy’s projections for the newly constructed crude unit, fluid
catalytic cracking unit and polymerization unit at HollyFrontier's
Woods Cross refinery. Forecasted EBITDA is included to help
facilitate comparisons of operating performance of Holly Energy
with other companies in our industry, as well as help facilitate an
assessment of the assets’ projected ability to generate sufficient
cash flow to make distributions to our partners. Forecasted EBITDA
is not presented as an alternative to the nearest GAAP financial
measure, net income, and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with GAAP. We are unable to present a reconciliation of forecasted
EBITDA because certain elements of net income, including interest,
depreciation and taxes, are not available. Together, these items
generally result in EBITDA being significantly greater than net
income.
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version on businesswire.com: http://www.businesswire.com/news/home/20160919005379/en/
HollyFrontier CorporationJulia Heidenreich, 214-954-6510Vice
President, Investor RelationsorCraig Biery, 214-954-6510Manager,
Investor Relations
HollyFrontier (NYSE:HFC)
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